3 ms·

If that's the case I'm kinda confused why trading platforms keep banning trades in these particular meme stocks?

• klodolph 6y ago
  Because they are forced to carry collateral to make the trades happen, and need more collateral for more volatile stocks.
• snet0 6y ago
  Because of the volatility of the stock, I believe. 100->300->200->300 in the space of no time at all. You could've watched the stock just jump all over the place in real-time, pretty much.
• andreygrehov 6y ago
  In the case of Robinhood: > On Thursday, Robinhood was forced to stop customers from buying a number of stocks like GameStop that were heavily traded this week. To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation.
• rich_sasha 6y ago
  What's small for the whole market isn't necessarily small for Robin Hood. It's not out of the question that Robin Hood could go under as a result of these shenanigans. Just very unlikely that would trigger any serious fallout downwind.
• ThrustVectoring 6y ago
  It's down to minutiae in the collateral brokers have to post to ensure that the clearing house doesn't eat losses. Trades on Wednesday aren't settled until Friday, so if a brokerage firm dies in the interim they have an obligation to complete a bunch of trades that they might not have cash for, and unwinding that exposes counterparties to the price moves in the interim. RH users have been buying a lot of meme stocks that move a lot in price, so they have to put up vast amounts of funds to ensure that nobody else suffers losses if they were to back out of the unsettled trades.